Employers in the private sector who hire individuals with disabilities are eligible for benefits, including tax exemptions and contribution waivers for up to three years.
To qualify, employers must establish an indefinite employment relationship with a person with disabilities. This benefit was extended for the year 2024.
Certain employers are legally obligated to hire individuals with disabilities based on the number of employees and specific conditions. For instance, employers with at least 20 employees must employ a minimum number of individuals with disabilities.
Newly employed persons with disabilities are entitled to benefits outlined in the Law on Personal Income Tax and the Law on Contributions for Mandatory Social Insurance.
Additionally, the Law on Professional Rehabilitation and Employment of Persons with Disabilities obligates employers to hire individuals with disabilities.
This information explores eligibility for benefits, employer compliance requirements, applicable benefits, qualifying conditions, and other relevant information.
1.1. Tax Incentives for Hiring Employees with Disabilities
The tax incentives for newly employed persons with disabilities apply to:
- Exemption from paying the calculated and withheld income tax (income tax rate is 10%);
- Exemption from paying the estimated mandatory social security contributions on the employer’s behalf.
The purpose of the benefits for employing persons with disabilities is to encourage companies to hire more, just like other incentives for expanding the workforce and hiring new employees.
In this case, the company using them is not obliged to pay income tax and employer contributions for three years from the day of establishing an employment relationship with that person.
It should be emphasized that the employer is not exempt from social security contributions on the employee’s behalf. In addition, they are obliged to calculate and pay contributions for pension insurance, health insurance, and contributions for unemployment on the employee’s behalf.
Contributions for which benefits are obtained are paid by the National Employment Service.
1.2. Who Qualifies as a Newly Employed Person with a Disability?
To be considered a newly employed person with a disability, the individual must meet the following criteria:
- Be unemployed and have the status of a person with a disability,
- Establish an employment relationship with the employer and sign an employment contract for an indefinite period,
- Be registered for mandatory social security,
- Not have been previously employed by their current employer or their employer’s family member, regardless of any gaps in employment history.
Therefore, if a person was previously employed by the current employer or by an employer related to the current company, the employer cannot use the right to benefits and exemption from paying taxes and contributions for that person. This applies even if there was a break in the employment relationship.
The following persons are considered related to the taxpayer:
- Natural or legal persons who have the potential to control or significantly influence the taxpayer’s business decisions. They must own 25% or more or have the largest share of shares, interests, or number of votes in management bodies individually.
- Family members of the taxpayer, including spouses or partners, descendants, adoptees and descendants of adoptees, parents, adopters, siblings and their descendants, grandparents and their descendants, siblings and parents of the spouse or partner.
1.3. What Qualifies Someone as a Person with Disabilities?
A person with disabilities is someone who has received official recognition of their status. This can happen in one of two ways:
- Through a decision based on the relevant regulation,
- Through assessing their work capacity and ability to obtain or maintain employment.
The Law defines a person with disabilities as “a person with permanent consequences of physical, sensory, mental, or psychological impairment or illness that cannot be eliminated by treatment or medical rehabilitation, who faces social and other limitations that affect work capacity and the ability to be employed or maintain employment, and who does not have the opportunity or has reduced opportunities, under equal conditions, to participate in the labor market and compete for employment with other individuals.”
2.1. What Conditions Must Be Met for Incentives for Employing Persons with Disabilities?
The employer must meet certain conditions in order to use incentives for newly employed persons with disabilities. Then, the conditions must be cumulatively (collectively) met:
- The employer and the employee with the status of a person with disabilities must have a permanent employment contract;
- The employee must be registered for mandatory social insurance;
- There must be legally and medically valid documentation proving the disability of the new employee.
When it comes to other conditions for tax incentives for employing persons with disabilities, it should be noted:
- The employer is not obliged to increase the number of employees he had on a certain date when hiring a new employee with a disability;
- The company is not obliged to maintain a certain number of employees during the use of incentives;
- There is no requirement for a newly employed person with a disability to have been unemployed and registered with the National Employment Service for some time before being employed by the employer.
2.2. Who is Ineligible for Tax Exemption for Disabled Employees?
The exemption from paying taxes and a portion of contributions for the employment of persons with disabilities cannot be claimed by:
- Government bodies and organizations,
- Public enterprises,
- Public services,
- Other direct or indirect budget beneficiaries,
- Private sector employers who already use tax incentives for that particular person or have used some other tax incentive for the same person they are employing.
To clarify, if a company meets the conditions for using other tax incentives to reduce taxes and contributions while employing a person with disabilities, it cannot simultaneously use multiple tax incentives.
2.3. What Documents are Needed for Tax and Benefit Exemptions for Employing Persons with Disabilities?
To use tax and contribution exemption benefits, employers must inform the National Employment Service and the Tax Administration.
The following documents must be submitted to the National Employment Service:
- Form OPNR-I includes information about the person with disabilities that the employer hires.
- A statement from the employer confirming that they have not used the exemption from paying contributions for the same person on another legal basis and that the employer or a related person has not employed the person.
- Legal-medical documentation that proves the person’s disability (if the person was not registered before employment at the National Employment Service).
To claim tax benefits for employing persons with disabilities, the employer must submit the OPNR-I form and relevant documentation to the Tax Administration branch.
This form should include all data about the newly employed person and should be submitted individually for each person within eight days of their commencement or termination of employment.
The employer must also calculate contributions on the employee’s behalf and submit the PPP-PD tax return electronically.
Legal-medical documentation proving the person’s disability must be attached, along with a copy of the employment contract and mandatory social security registration.
3.1. Which Employers Must Hire Persons with Disabilities?
Employment of persons with disabilities is a legal obligation for some employers. Employers with at least 20 employees and are not considered newly established companies must employ persons with disabilities.
Private-sector employers to whom this obligation applies include:
- Domestic and foreign companies,
- Natural persons as employers,
- Entrepreneurs who have 20 or more employees,
- Non-profit organizations that have the status of another legal entity with 20 or more employees.
3.2. Who is Exempt from Obligations to Employ Persons with Disabilities?
Employers who do not have a legal obligation are:
- Employers who have fewer than 20 employees in employment;
- Newly established employers within 24 months from the date of establishment;
- Branches and representative offices of domestic legal entities;
- Branches and representative offices of foreign legal entities.
Explanation:
Employers with less than 20 employees (e.g., 19) are not obliged to employ persons with disabilities. Furthermore, newly established companies are not obligated to employ persons with disabilities during the first two years of operation or 24 months from the date of establishment, regardless of the number of employees in that newly established company.
3.3. How Many Persons with Disabilities Must Employers Hire?
The number of employees is crucial in determining the obligation to employ and the number of persons with disabilities an employer must hire. It is determined based on the total number of employees at the employer. A more detailed breakdown is as follows:
- If there are up to 20 employees in employment – there is no obligation to employ a person with disabilities;
- A company with 20 to 49 employees – must have one person with disabilities in employment;
- An employer with 50 to 99 employees – is obligated to have two persons with disabilities in employment;
- If there are 100 to 149 employees – the obligation is to have three persons with disabilities in employment;
- For each additional started 50 employees, the responsibility is to have an additional person with disabilities.
An employer with 50 or more employees must employ one person with disabilities for each additional 50. Therefore, persons with disabilities are counted in the total number of employees.
3.4. What is Considered Employment Under Serbian Law?
Under Serbian law, individuals who establish a working relationship with an employer are considered employed. This includes workers employed indefinitely, on a fixed term, part-time, and those working outside the company’s premises.
In addition to regular employees, the number of employees also includes pensioners, founders of companies employed in their own company, employees with disabilities, and employees who received compensation from other sources during the month when the employment obligation is determined.
Seasonal increases in the number of temporary employees are also taken into account.
However, the following individuals are not included in the number of employees when determining the obligation to employ persons with disabilities: entrepreneurs, individuals with suspended employment relationships, and workers engaged based on other contracts for which they receive compensation (e.g., occasional temporary jobs, author’s contract, a service contract for work, etc.).
3.5. How is the Obligation to Employ Persons with Disabilities Monitored?
To meet the obligation of employing persons with disabilities, employers must have the required number of disabled employees by the last day of the month. Monthly monitoring is done on this day to ensure compliance.
If the required number of disabled employees is met, the obligation is fulfilled, but the total number cannot decrease below the established minimum for that month, even if it’s a non-working day. Failure to comply leads to an unfulfilled obligation.
Employers must then fulfill their obligation through alternative means, such as paying into the Republic of Serbia’s budget or collaborating with other companies to support the employment of individuals with disabilities.
If you have any further questions about obtaining benefits for employing persons with disabilities or if you want to hire a person with disabilities, please contact us. HLB T&M Consulting accounting agency provides expert assistance in applying for tax incentives, support for realizing this right, and payroll and HR services.
